Fed Uncertainty and AI Spending Shake U.S. Stock Markets

U.S. stock index futures flattened after a sharp selloff triggered by Fed policy uncertainty. Microsoft's impressive forecast eased fears about AI spending. The tech-heavy Nasdaq plunged 10%, influenced by poor cash-flow reports from tech giants. Traders braced for potential rate hikes amid conflicting Fed messages and key GDP data poised for release.

Fed Uncertainty and AI Spending Shake U.S. Stock Markets
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  • Country:
  • United States

U.S. stock index futures stabilized on Thursday following a sharp selloff, sparked by ambiguity surrounding the Federal Reserve's policy outlook. Invigorating investor sentiment, Microsoft reported forecast-beating results that calmed concerns over escalating AI spending by major tech firms.

With premarket trading witnessing a nearly 9% surge in Microsoft's shares, the tech giant's current-quarter sales and cloud growth projections exceeded expectations. Tensions remained as other tech stalwarts like Meta Platforms and Qualcomm saw declines due to unfavorable financial reports. The Nasdaq slumped 10% from its early June peak, highlighting unease within AI-linked sectors.

Meanwhile, traders are betting on a 65% probability of a 25-basis point rate hike in September. Additional economic indicators, including GDP data and jobless claims, loom on the horizon, whimsically intertwining investor decisions against a backdrop of mixed Federal Reserve cues.

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